Practice Quiz

Praxis II: Economics Content Knowledge Exam Prep - Question List

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21. Economists state that government purchases have a multiplier effect on aggregate demand. In other words, every dollar spent by the government leads to an increase in aggregate demand for goods and services by a dollar or more. According to the multiplier equation below, what does MPC stand for? Multiplier = 1/(1-MPC)
  1. Marginal propensity to consume
  2. Medium proportion to consumption
  3. Marginal proportion to consumption
  4. Medium propensity to consume
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22. Prices for goods and services depend largely on the product’s lifecycle. Which is the correct stage progression in a product’s lifecycle?
  1. Launch - maturity - decline
  2. Growth - proliferation - maturity - decline
  3. Growth - maturity - decline
  4. Launch - growth - maturity - decline
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23. Which of the following is not an example of the government’s attempt to reduce national poverty?
  1. Welfare
  2. Social Security
  3. Income taxes
  4. Minimum wage laws
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24. If the tax multiplier is −4 and net taxes are reduced by $200 billion, what will the output be?
  1. $600 billion
  2. $100 billion
  3. $800 billion
  4. $50,000
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25. Which of the following economic questions must any society answer, regardless of its location, size, or political form?
  1. Who will consume the services and goods produced?
  2. What goods will be produced?
  3. What methods of producing goods are appropriate for our society?
  4. All of the above
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